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From fuel perks and vacation travel to subway rides and cash back, consumers have more choices
than ever when it comes to redeeming credit-card rewards.

The increasing popularity of rewards cards has sparked an arms race of sorts from issuers hoping
to attract and retain new business. Chances are good that whatever your interests and spending
habits, there’s a card for that.

“Customers expect that they’re going to get rewards when they get a credit card,” said Amy
Lenander, vice president of rewards programs for Capital One. “They see rewards as free money —
that’s definitely the way they view it.”

Finding a card that fits

With all the choices, deciding what card is best for you — including how to unlock the greatest
value from rewards — can be overwhelming.

One approach is to follow the crowd. According to a Capital One survey of rewards-card users,
cash is the most popular rewards-card currency, followed by points and airline miles. The top
redemption options, in no particular order, are gift cards, cash back (statement credits or
payouts) and domestic airline tickets.

The survey also indicated that loyalty is fleeting — 67 percent of those surveyed said they’d
switch to another card that offers more rewards for every dollar spent.

“Most people fall into one of two categories: those who just want to keep it easy and simple,
and those who view rewards as a treat and a delight,” Lenander said.

The “easy and simple” crowd will likely choose some type of cash-back card, while those in the “
treat and delight” group will gravitate toward travel rewards and cards offering bonus points in
rotating categories. “For them,” she said, “earning a trip or gift card makes them happy. They get
pleasure from it.”

She identified Capital One’s Quicksilver card as a favorite of cash-back customers. It’s
low-maintenance, with no annual fee or foreign transaction fees, and credits users 1.5 percent cash
back on every purchase. As with all Capital One cards, points never expire.

Joe Ridout, spokesman for the advocacy group Consumer Action, divides rewards cards into two
categories — those with great flexibility and lots of choices, and those with little or no
flexibility. Though it sounds contradictory, some of his favorite cards are in the latter
category.

For simplicity and value, it’s hard to beat the PenFed Visa Platinum Cash Rewards card, he said,
which offers users one thing only: a discount on fuel. The card gives 5 percent cash back on
purchases at the pump, automatically applied as a statement credit. And there’s no annual fee.

“It’s great for somebody who drives a lot,” he said, “and it’s one of the best cards out there
precisely because it doesn’t require anything of the consumer.”

American Express Blue Cash Preferred is another one he likes for ease of use and simplicity.
While you can earn rewards on gas and department-store purchases, its real forte is 6 percent back
on groceries up to $6,000 spent annually, which can amount to savings of $360 a year. It’s worth
noting, however, that there is a $75 annual fee.

“It winds up being 4.75 percent cash back, but that’s still a fantastic savings on your grocery
spending,” Ridout said.

For those interested in earning travel rewards, Ridout suggests avoiding cards issued by most
airlines because of blackout dates for rewards travel, relatively short expiration windows, and the
airlines’ history of reducing the value of miles.

“Frequent-flier programs never get better, they only get worse,” he said. “Sitting on a
truckload of miles is rarely a good idea.” One exception: Southwest, which won’t be a viable option
for people in all parts of the country.

Better values in the travel-rewards category, according to Ridout, include:

•
Chase Ultimate Rewards — Cardholders can transfer reward points with no transfer
fees to several airline, rail and hotel partners, including British Airways, United, Southwest,
Amtrak, Hyatt, Marriott and Ritz Carlton. Points also can be used to shop at Amazon.com.

•
Barclay Arrival – Pays 2 percent back on travel spending up to $10,000 a year,
worth $200. A 10 percent bonus is awarded for all points that are redeemed, which boosts the
payback rate to 2.2 percent. One negative — the $89 annual fee starting in the second year reduces
the value of rewards. “If you’re not spending a lot of money on the card, it’s probably not the
best choice once you start paying the annual fee,” he said.

•
American Express Starwood — Ridout likes this one because in addition to easily
being able to book hotel stays with points, frequent users are periodically treated to special
events, including access to playing fields at major sporting events and early-bird ticket sales for
concerts.

Category cards

A popular trend in recent years has been cards offering rotating categories of spending that
qualify for elevated rewards.

One innovative newcomer is Huntington Bank’s Voice card, which offers 3 points per dollar spent
on one of 13 categories chosen by the cardholder, on up to $2,000 spent per quarter in that
category. Categories can be changed every quarter. Among the choices: gas, utilities, Wal-Mart,
restaurants and groceries. Voice has no annual fee, no foreign transaction fee and no penalty
interest rate for late payments.

Chase Freedom, the Discover “it” card and Citi’s Dividend Platinum Select are among those
offering cash-back rewards of around 5 percent for rotating categories.

“If you’re willing to stay on top of the flavor of the month, the rotating-categories cards can
have great value for consumers,” Ridout said.

Take advantage of sign-up bonuses

Signing bonuses not only make professional athletes rich, they also are a great source of value
for rewards cardholders. “We’re living in a golden age of credit-card sign-up bonuses,” Ridout
said.

The Chase Ink Bold offers one of the best sign-up bonuses in the business: Earn 50,000 bonus
points after you spend $5,000 in the first three months from account opening. That’s a $500 value.
In addition, the points are worth

25 percent more if you use them for travel booked through Chase.

“The sign-up bonus is the equivalent to what you’d get after spending about $50,000,” said
Ridout, who estimates he saves several thousand dollars every year by signing up for cards with
generous bonuses and dropping older cards after the annual-fee waiver expires.

His final piece of advice: never redeem rewards for that old standby — magazine subscriptions —
unless it’s a last resort.

“It’s an awful choice, but using your points and miles is always better than letting them
expire.”